You are on page 1of 14

International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

International Journal of Sustainable Agricultural Research


ISSN(e): 2312-6477/ISSN(p): 2313-0393

URL: www.pakinsight.com

PERFORMANCE OF MULTI-PURPOSE COOPERATIVES IN THE SHISELWENI


REGION OF SWAZILAND


T.A. Masuku1 --- M.B. Masuku2 --- J.P.B. Mutangira3
1
Manzini, Swaziland
2
Department of Agricultural Economics and Management, University of Swaziland, Luyengo Swaziland
3
Department of Adult Education, University of Swaziland, Swaziland

ABSTRACT
A multi-purpose cooperative is a business that is a mixture of two or more different types of cooperatives. The study
examined the performance of multi-purpose cooperatives in Swaziland. The objectives of the study were to; establish
the performance of multi-purpose-cooperatives, identify factors influencing the performance of multi-purpose
cooperatives, and identify constraints faced by multi-purpose cooperatives. A descriptive research design was used
where quantitative and qualitative methods were employed to collect and analyse data. The target population was all
registered and active multi-purpose cooperatives in the Shiselweni region. A sample (n=120) was drawn using a two-
stage stratified random sampling procedure and it comprised of 80 cooperative members, 35 committee members and
5 cooperative officers who were purposely selected. Face to face personal interviews were used to collect the data.
Data were analysed using the Statistical Package for Social Sciences (SPSS version 20). The study found that the
performance of multi-purpose cooperatives was influenced by gender and accountability. The study further found that
cooperative officers educated and trained cooperative members once a year. Major constraints included poor capital
base, most members being too old to perform cooperative activities, and poor record-keeping. The study concluded
that cooperatives were not performing well financially, since there were making losses. It is recommended that
cooperatives should ensure the financial statements were prepared on time and audited. There is need to encourage
young farmers to join multi-purpose cooperative since most of the farmers were old. The frequency of training
provided to members need to be improved. The study also recommends that other studies be carried out to cover the
whole of Swaziland in order to generalise the findings.
2016 Pak Publishing Group. All Rights Reserved.

Keywords: Accountability, Cooperatives, Education and training, Governance, Multi-purpose, Performance, Shiselweni region, Swaziland.

Received: 12 November 2016/ Revised: 8 December 2016/ Accepted: 27 December 2016/ Published: 21 January 2017

Contribution/ Originality
This study contributes to existing literature by analyzing the performance of multipurpose Cooperatives. The
study not only established the performance of multi-purpose cooperatives, but also identified the factors affecting the
performance of multi-purpose cooperatives, especially in Swaziland. The study used primary data, hence it is original.

58
Corresponding author
DOI: 10.18488/journal.70/2016.3.4/70.4.58.71
ISSN(e): 2312-6477/ISSN(p): 2313-0393
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

1. INTRODUCTION
1.1. Overview of Cooperatives
Cooperation is considered the best possible alternative mode of organizing business to assure economic and
social stability. Cooperation as a way of life continues to be a tradition in finding the solution to the socio-economic
problems of people. Traditional forms of cooperation involved community members voluntarily pooling financial
resources through an association of people with the common objectives of mobilizing resources, especially finance,
and distributing them to members on rotational basis (Masuku, 2005).
A cooperative is an autonomous association of persons united voluntarily to meet their common economic needs
and aspirations through a jointly owned and democratically controlled enterprise (International Cooperative Alliance,
2006). The distinguishing features of cooperatives are encapsulated in the seven cooperative principles, which include
(i) voluntary and open membership, (ii) democratic member control, (iii) member economic participation, (iv)
autonomy and independence, (v) education, training and information, (vi) cooperation among cooperatives and (vii)
concern for community. Cooperatives function on the basis of the values of self-help, self-responsibility, democracy,
equality, equity and solidarity. Cooperative Principles, for example, emphasize the centrality of cooperative
education, training and information so that they contribute effectively to the development of their cooperatives
(Chambo, 2009) hence cooperatives should provide education and training for their members as well as elected
representatives and employees (Mdluli, 2003). A multi-purpose cooperative is a business that is a mixture of two or
more different types of cooperatives. Multi-purpose cooperatives are member based organisations for agricultural
farmers in rural communities (ICA, 2006).
Sustainability of cooperatives depends on active membership. Table 1 shows that in 2013, there were 4463
registered cooperative members in the country, of whom 3196 (72%) were active. Out of the 3196 active members,
only 3050 attended the annual general meetings in 2013. The annual turnover was E59 862 991, with most of it being
generated from the Hhohho region (E31 171 217) and Shiselweni Region (E16 015 528) where most of the
cooperatives were based.

Table-1. Multi-purpose Cooperative Membership in Swaziland (2013)


Registered Active Annual AGM
Region Turnover attendance
Male Female Total Male Female Total (E) Total
Hhohho 749 874 1623 639 626 1265 31171 217 1040
Lubombo 389 556 945 305 519 824 8 341 793 768
Manzini 259 495 754 184 337 521 4 334 453 441
Shiselweni 507 634 1141 199 387 586 16 015 528 801
Grand Total 1904 2559 4463 1327 1869 3196 59 862 991 3050
Source: Swaziland Government (2013)

Cooperatives exist to provide members with services such as savings, loans, education and training as well as
buying and selling goods at reasonable prices (consumer goods and farm inputs). This enables members to earn
income, increase their purchasing power and promote among themselves equitable distributions of the net surplus.

1.2. The problem Statement


Cooperatives are meant to serve membership to achieve their socio-economic needs and goals through the
establishment and operation of autonomous, member-owned businesses that generate income and employment
(Swaziland Government and UNDP, 2012).
Multi-purpose cooperatives are regarded as key institutions for promoting rural development and poverty
alleviation. They are channels for community participation in economic development, enabling members to
coordinate their efforts and gain economic benefits. The participation of people in multi-purpose cooperatives in

59
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

Swaziland is very low at primary level because of different reasons emanating from social and economic influences
(Hlatshwako, 2010). For example, although there were 123 multi-purpose cooperative in 2013 and 126 in 2014, the
number of registered cooperatives had only increased by 2 per cent and membership by 3 per cent. The development
of multi-purpose cooperatives faces challenges in sustaining their business. The management of cooperatives remains
crucial for their sustenance as vehicles of income generation and social security in communities (Swaziland
Government and UNDP, 2012). Poor performance of multi-purpose cooperatives could be attributed to; inadequate
business management and entrepreneurial skills among staff and elected committee members, poor governance in
administering cooperatives principles, limited advocacy and communication skills, and financial constraints that
make it impossible to recruit and retain a good calibre of staff and to provide capacity building among members and
leaders.

1.3. Objectives of the study


The specific objectives of the study were:
(i) To establish the performance of multi-purpose cooperatives;
(ii) To identify factors influencing the performance of multi-purpose cooperatives;
(iii) To identify constraints faced by multi-purpose cooperatives.

2. LITERATURE REVIEW
2.1. The Concept of Cooperative Performance
Performance is defined as an improved product quality, productivity or technical efficiency, service capabilities
of a firm, which lead to sustainable profits (Read and Miller, 1990; Clark, 1991; Harrington, 1991). Harrington
(1991) in their study, defined cooperative performance in terms of key indicators such as returns on investment,
satisfaction of members on goods and services provided by cooperatives and education and training of members and
employees.
The review of literature concerning performance of cooperatives shows that in this type of organisation, there
still exist an unresolved question of performance measurement. The financial ratios, mostly based upon efficiency
measures (profit / financial resources), do not seem adequate to estimate cooperative performances. Due to a specific
double commitment of cooperative members, as grower-suppliers and member-owners of their patrons, cooperatives
face a problem of dual performance objectives (short term remuneration for the growers, long term value creation for
the owners) and find it difficult to establish balanced governance in order to solve this internal conflict of interests
called cooperative dilemma (Antoine et al., 2011).
Kulandaiswamy and Murugesan (2004) stated that literature on cooperatives was predominantly narrative.
Empirical work using macro level data on cooperatives was conspicuous. Whatever little empirical work is available
on cooperatives is based on case studies. While some case studies employed primary data obtained through surveys,
others made use of balance sheet information. An attempt to evaluate the performance of a primary agricultural
cooperative (PAC) in its various dimensions using a comprehensive yardstick of performance was made by
Kulandaiswamy and Murugesan (2004). They studied 30 PACs for a ten-year period using 13 performance
parameters in selected development blocks of western Tamil Nadu based on field survey data. They employed a
scoring procedure validated by parametric (One way Analysis of Variance) and non-parametric measures. The PACs
were classified into three performance categories; poor, moderate and good. Their study found working capital, total
loans outstanding, total business turnover, over dues, net worth and loans to weaker sections as relevant and valid
performance indicators for PACs. Based on their study, Kulandaiswamy and Murugesan (2004) advocated measures
such as re-capitalization, amalgamation, bringing down over dues and improving the overall efficiency of PACs.
A broad overview of performance indicators for cooperatives was provided by Murugesan (2007) where.
performance under each broad indicator category was evaluated using ratio analysis. Chalam and Prasad (2007) used

60
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

a number of ratios under four broad groups like liquidity, operational, productivity and profitability ratios to study the
financial performance of nine selected PACs in West Godavari District of Andhra Pradesh. Chalam and Prasad
(2007) indicated that case studies though had their own merits and demerits, the findings could not be generalized
across a broad spectrum. However, it was difficult to trace any attempt at the individual researcher level to examine
the performance of PACs on a broad arena like across the states. State level ratio analysis of the comparative
performance of PACs was attempted by a number of Committees and Commissions that were set up to look into
different dimensions of the problem concerning cooperatives. However, parametric estimate of different factors
governing the performance of PACs is one area, which has not been explored.
Perceptions of cooperative members regarding the performance of their cooperatives were studied by Dakurah et
al. (2005) who found that, under the management, performance criteria cooperatives were generally doing well for
most of the aspects, except for the provision of technical assistance to members in the development of business plans,
and marketing studies, where respondents expressed ambivalence. Customer service received good performance
evaluations and was one of the issues identified by respondents to be the reason for patronizing cooperatives.
However, respondents expressed ambivalence on the issues of facilitating networking among members, providing
useful websites, and access to technology under this performance criterion. Respondents especially liked the
competitive environment created by the presence of cooperatives in their communities. They found the performance
of their cooperative under this criterion to be good in all the issues investigated. Similarly, cooperatives were
perceived to be doing well on expanding market for new products and services, and representing clients interests.
The performance of cooperatives in maintaining member commitment was also evaluated. Respondents expressed
ambivalence regarding the performance of their cooperatives in maintaining member commitment, especially in
facilitating discussions among members, and offered members education or training. The performance of
cooperatives under public interest and involvement was evaluated as doing well with no contradiction. Finally,
respondents were directly asked if they considered their current cooperatives successful. The majority (93%) thought
their cooperatives were successful (Dakurah et al., 2005).

2.2. Performance of Multi-Purpose Cooperatives


Multi-purpose cooperatives are a unique type of private enterprises that embrace both the associative component
as well as the business component and are guided by the International Cooperative Alliance (ICA) values and
principles of cooperation. The motive is inducing individuals to join existing or to form new cooperatives that can
originate in the economic-rational sphere and in the sociological and psychological spheres. Multi-purpose
cooperatives are associations of primary producers who have come together to achieve some common commercial
objectives more successfully than they could as individuals such as marketing their produce, purchasing farm
supplies, purchasing consumer goods for sale, sharing equipment, or supplying services such as storage or transport.
More generally, their goal is to enable rural people to improve their social and economic conditions by working
together in ways that are more productive than working individually (Australian Agricultural Council, 1998).
Develtere et al. (2008) reported that the declining performance of agricultural cooperatives has seen the income
of crop farmers dwindle over the years, a situation that has triggered some of the co-operators to come up with
innovative cooperative ventures in this sector. Furthermore, cooperatives are also increasingly venturing into other
non-traditional sectors including housing, consumer, livestock and bee-keeping. It is also significant to note that
cooperatives are increasingly looking beyond their national borders to find markets for their products, which was not
possible in the era of state controlled cooperative development. Available information suggests that such
opportunities are increasingly being utilized by cooperatives to tap economies of scale to improve the productivity of
their members. Such cooperatives are operating as demand-driven and market-oriented business organisations. The
result is the increasing improved performance of such cooperatives as evidenced by higher turnover of the
cooperatives; improved income to the participating members; and improved cooperatives.

61
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

Reports regarding the financial difficulties experienced by agricultural cooperatives in Africa have been much
more common recently than news of their successes. Several financial ratios for cooperatives (revenue growth, return
on assets and operating margins) were calculated which indicated weak performance in the cooperative sector. This
creates doubt about the viability of the cooperative form of business in agriculture, causing members to question their
cooperatives performance and/or become reluctant to proceed in organizing a future venture under the cooperative
structure (Gray and Kraenzle, 2002).
Multi-purpose cooperative members provide finance to their cooperative enterprise through equity investments
and the cooperative is controlled by the membership through the committee (directors). The committee members hire
the manager and establish a policy under which the manager operates (Gray and Kraenzle, 2002). When the
cooperative performs well, its business volume and value are expected to grow from year to year so that it will benefit
its members as owners, users and controllers of the cooperative business. This might indicate whether the cooperative
is performing negatively or positively. In their study, Gray and Kraenzle (2002) found that governance,
accountability, transparency, members participation, education and training were considered to contribute to the
performance of cooperatives.
The ability of cooperatives to search for lucrative markets for its members can improve rural farmers returns in
their productive activities. Participating in networks, cooperatives can also provide farmers with information that can
improve their skills and knowledge, which may not be accessible to all farmers not participating in the network
(Totlund, 2004).
In a democratic organisation like cooperatives, the general membership is the supreme organ and the
management committee is elected by membership to look after the business affairs. A sustainable cooperative is
defined by Rankin and Russell (2005) as economically successful and hence able to compete with other cooperatives
and the private sector. Samson (2010) conducted and evaluation of social and economic performance of cooperatives
and found that, multi-purpose cooperatives were facing problems of finance and capitalisation. Several characteristics
could be distinguished when assessing the performance and loyalty of cooperative members. When measuring the
performance of cooperatives, it is important to distinguish between the social and economic performance. There are
two measures for social performance, which include loyalty and farmers satisfaction.

2.3. Conceptual Framework


The conceptual framework used by the study was adapted from Zamora and Agutaya (2011). It is presented in
Figure 1 and shows the variables used in the study. The major independent variables were governance as expressed in
democracy and participation, and accountability as expressed in transparency in cooperatives. The dependent variable
is cooperative performance as expressed in economic success, which was measured by the financial performance and
operational/social performance of the cooperatives which include the satisfaction of members on the services
provided by the cooperatives. The rival independent variables that may affect performance of cooperatives were
cooperative education and training.

62
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

Independent Variables Dependent Variables (DV)


Governance (IV) Cooperative Performance
Democracy Financial performance
Participation (Papadopoulos, 2003; Sanner Operational/Social performance eg.
and Wilson, 2003; Develtere et al., 2008) Satisfaction (Gray and Kraenzle,
Accountability (IV) 2002; Sanner and Wilson, 2003)
Transparency (Armstrong, 2005; Develtere
et al., 2008)

Rival Independent Variables (RIV)


Education and Training
(Ortmann and King, 2007)
Figure-1. Conceptual Framework of Cooperative Performance
Source: Adapted from Zamora and Agutaya (2011)

3. METHODOLOGY
3.1. Design of the study
A descriptive survey research design (Best and Kahn, 2007) was used in the study, where both quantitative and
qualitative methods (Creswell, 2013) were employed to collect and analyse data. A descriptive survey was selected
because it provides an accurate portrayal or accounts of the characteristics, for example, behaviour, opinions,
abilities, beliefs, and knowledge of a particular individual, situation or group.
Quantitative research methods were used on the basis that quantitative research has the potential to generate
research data that can be analysed using numerical techniques (Babbie, 2013) while qualitative research methods
were also used to get an in-depth understanding of social practice of the participants.

3.2. Target Population


The target population for the study was all registered and active multi-purpose cooperatives in the Shiselweni
Region of Swaziland, which were involved in the supply of farm inputs and consumer goods. It comprised of 396
members of multi-purpose cooperatives and 5 cooperative officers, who provide services to all multi-purpose
cooperatives in the Shiselweni region.

3.3. Sample Size and Sampling Procedure


An up to-date list of multipurpose cooperatives was obtained from the cooperative department in the Shiselweni
region. The target population was all registered and active multipurpose cooperatives in the Shiselweni region of
Swaziland, who were involved in the supply of farm inputs and consumer goods. A two-stage stratified random
sampling procedure (Babbie, 2013) was used for the selection of the sample for cooperative members. The first stage
was to purposively choose all multi-purpose cooperatives, whose main activities were the provision of farm inputs
and consumer goods. This included seven multi-purpose cooperatives as shown in Table 2, whilst the second stage
involved a stratified random sampling of 80 cooperative members from a population of 396, using a Slovin sampling
technique (Simamora, 2004). Given the available resources and time constraints 10% margin of error was considered
sufficient as desired for the sample (Table 2).

63
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

n = Sample size
N = Population
e = Margin of error desired
N =396

=396/ (1+ (396 x 0.10 x 0.10)) = 80

Table-2. Distribution of sample


Multi-purpose Population (Ci) Sample Committee Ordinary Cooperative
Cooperative (Ci/396) x115 members members officers
Gege 56 16 5 11
Mthonjeni 57 17 5 12
Zombodze 29 8 5 3
Phakamani 36 11 5 5
Kaphunga 167 49 5 44
Nkhungwini 23 7 5 2
Simoyini 28 8 5 3
Total 396 115 35 80 5
Source: Field survey, 2015

Further, 35 committee members were purposively selected from the selected multi-purpose cooperatives. These
consisted of Chairperson, Secretary, Treasurer and two other randomly selected committee members to make a total
of 5 committee members per cooperative. These committee members were assumed to possess rich knowledge about
the cooperative. No sampling was done for the five (5) cooperative officers who provide services to all cooperatives
in the Shiselweni region. Thus the sample size for the study was, n=120.

3.4. Analytical Framework


3.4.1. Performance Indicators of Multi-Purpose Cooperatives
To determine key performance indicators of cooperatives, a Probit model was used. Cooperative performance
(profit perception, quality of services perception, access to credit), was measured and evaluated against key measures
of independent variables, that is, cooperative governance, accountability, transparency, participation by members, and
cooperative members education and training. Performance was captured as a dependent variable denoted as Y, while
the independent variables were captured as X 1 to Xn representing governance, accountability, transparency,
participation, democracy, gender, age, and education level.

3.4.2. Composite Score


This was used to measure the status of performance. Respondents were made to respond to questions related to
performance of their cooperatives. Likert-type scale scores ranging from 1 to 5 regarding performance were used to
rate respondents. With 5 statements, a respondent was expected to score a maximum of 90 points and a minimum of
18 points. The categorisation into high and low performance was then achieved using a composite score as earlier
used by Adepoju et al. (2011). This is given as; High category = between 90 points to (Mean + SD) and low category
= Between (Mean SD) to 18 points.

64
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

3.5. The Probit Model


3.5.1. Model Specification
The model was used to determine the factors affecting performance of the multi-purpose cooperatives. The Probit
Y has an index function explicitly explained as:
Y1 = 0 + 1 X1i +2 X2i ++k Xki +i
= F (1 + 2 Y2i +k Yki ) where F is the cumulative distribution function of i. It is assumed that the density
function of i is symmetric, that the probability density function (pdf) of the error term is the standard normal
distribution, i.N (0, 1). The Probit model is estimated by Maximum Likelihood Estimation.
Y=Performance (Likert-scale statements of performance ranked into 1=high performance and 0 = low performance.
0 = Constant
1 9 = Parameters to be estimated
X1 = Statements measuring governance (Likert-type scale)
X2 = Statements measuring accountability (Likert-type scale)
X3= Statements measuring transparency (Likert-type scale)
X4= Statements measuring participation (Likert-type scale)
X5 = Statements measuring democracy (Likert-type scale)
X6 = Gender (1 for male and 0 for female)
X7 = Age (years)
X8 = Education level (ordinal scale)
e = Random error term.

3.5.2. Explanation of Variables and Apriori Expectations


Governance (X1): Governance refers to the way those with power use or exercise that power. Cooperative
principles call for democratic governance. Since the cooperative is by and large for the members, the members are
expected to make decisions regarding the cooperative. Good governance is posited to have a positive relationship
with performance of multi-purpose cooperatives.
Accountability (X2): Accountability is the capacity to call upon management and members of the cooperatives to
account for their actions. Accountability is expected to have a positive relationship with performance of cooperatives.
Transparency(X3): Transparency enables participation of members in a cooperative. Transparency requires
dissemination of information to all members of cooperatives for effective decision-making; hence transparency is
expected to have a positive relationship with cooperative performance.
Participation (X4): As a component of governance, the principles of cooperatives call upon good governance
among cooperatives. The performance of multi-purpose cooperatives depends on the involvement of members in all
activities of the cooperative. Hence, a positive relationship is expected between participation and performance of
multi-purpose cooperatives.
Democracy (X5): Democracy is a way of governing. Democratic governance requires that members of
cooperatives as users are involved in the running of the affairs of the cooperative. Democratic governance is regarded
as good governance and positively related to cooperative performance.
Gender (X6): Gender refers to whether the farmer is male or female. There is no expectation in terms of the
relationship between gender and cooperative performance. Hence gender can have positive or negative relationship to
performance.
Farmers age (X7): This represents the knowledge that the cooperative member has supposedly acquired in the
business of cooperatives. Experience comes with age and therefore, a positive relationship is expected between age
and performance of multi-purpose cooperatives.

65
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

Educational level (X8): The level of education is crucial in performance of any business entity as this has to do
with understanding of operations and management of a business. This assumption results in proper management in
cooperatives, thus improving their performance.

3.6. Data Analysis


Data were analysed using descriptive and inferential statistics involving means, standard deviations, frequencies
and Probit regression respectively.

4. RESULTS AND DISCUSSION


4.1. Demographic Characteristics of Cooperative Members
The results of the study in Table 3 indicate that most (63.5%) of the respondents were females, whilst 35.3%
were males. The majority (33.9%) of the respondents were between the ages of 60 to 69 and 6.1% were 80years and
above. This suggests that most of the members of multi-purpose cooperatives in the study were old.
Most (63.5%) were married, whilst 34.8% were single. A slight majority (51.3%) had primary school education,
and 14.8% had no formal education at all. This result indicates that although 51.3% of the respondents had a primary
level of education and above, the 14.8% with no formal education were a serious concern because education enhances
understanding of cooperative reports by members. If the level of education is low it will affect members effective
contribution to the strategies for cooperative performance.

Table-3. Demographic characteristics of cooperative members (n =115)


Item Frequency %
Gender
Female 73 63.5
Male 42 36.5
Age:
29 -39 10 8.7
40 - 49 22 19.1
50 - 59 23 20.0
60 - 69 39 33.9
70 - 79 14 12.2
80 and above 7 6.1
Marital status
Married 73 63.5
Single 40 34.8
Widowed 1 0.9
Divorced 1 0.9
Education level
None 17 14.8
Primary 59 51.3
Secondary 25 21.7
High school 9 7.8
Tertiary 5 4.4
Source: Field survey, 2015

4.2. Operational / Social Performance of Multi-Purpose Cooperatives in Swaziland


The study sought to establish operational or social performance of multi-purpose cooperatives. Five (5)
statements on the level of satisfaction with performance of cooperatives were used to measure operational
performance. Respondents were asked to rate their level of satisfaction with MPCs performance each statement using
a five-point Likert scale. A mean of less than 3.0 meant members agreed with the statement, while a mean above 3.0
meant members disagreed. The results obtained are presented in Table 4.

66
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

Table-4. Operational/Social performance of multi-purpose cooperatives (n=80)


Item Mean SD
Members have easy access to credit 1.277 1.108
Farm inputs are obtained from the cooperative 1.798 0.847
Members are encouraged to save regularly 1.931 0.876
Satisfaction with quality of service 2.107 1.064
Cooperatives generate surplus/profit for members 2.107 1.064
Overall 1.840 0.990
Rating scale: 1 = Strongly Agree, 2 = Agree, 3 = Uncertain, 4 = Disagree, 5 = Strongly Disagree.

The results suggest that the cooperatives were performing well (mean = 1.840) and the standard deviation (SD =
0.990) shows that there is little variation. Respondents stated that multi-purpose cooperatives generated profit for the
members and it would be the responsibility of members to decide what they intended to do with the profits. The study
found out that members were satisfied with services provided by their multi-purpose cooperatives and that in those
multi-purpose cooperatives which provided loans to members, farm inputs were easily obtained because members had
easy access to credit. The results obtained show that cooperative members were in agreement with the statements
measuring operational performance. The results corroborate with Zamora and Agutaya (2011) who emphasized that
when multi-purpose cooperatives are properly managed, financial records and reports are up to date and are made
available to members.

4.3. Financial Performance of Multi-Purpose Cooperatives


4.3.1. Document Analysis
Annual reports and audited financial statements were used for document analysis. An audit is an independent
examination of, and expression of opinion on the financial statements of a cooperative by an appointed auditor.

4.3.2. Annual Reports


The study found out that minutes of ordinary members and committee members were recorded and approved by
the general membership. The trend in submission of financial statements to auditors was gleaned from the 7 MPCs
annual reports for the past 5 years 2011-2015. In Gege MPC, it was reported that the management did not submit
financial statements for three (3) years. In Mthonjeni MPC, the reports showed that a financial statement was not
submitted for one (1) year. In Zombodze, it was reported that the management did not submit financial statement for
one (1) year. In Phakamani, the reports revealed that a financial statement was not submitted for one (1) year. In
Kaphunga, the reports showed that the MPC submitted all financial statements for audit. In Nkhungwini, it was
reported that the management did not submit financial statements for three (3) years. In Simoyini, the reports showed
that the management did not submit financial statements for two (2) years.

4.3.3. Audited Financial Statements


When audited statements were presented to each cooperative, it means those cooperatives submitted their
financial statements to auditors for audit purposes. The audit was done promptly when financial statements were
presented on time (i.e. immediately after the end of the financial year of each multi-purpose cooperative). Table 5
summarises the financial statement based on; (i) Audit, (ii) Profit and (iii) Loss.

67
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

Table-5. Profit /Loss for multi-purpose cooperatives in Emalangeni for the financial years 2011 to 2015
Cooperative 2011 P/L 2012 P/L 2013 P/L 2014 P/L 2015 P/L
Gege (32 047) L (10 214) L NA NA N/A
Mthonjeni (4 390) L (8 173) L 7 852 P NA (1 756) L
Zombodze (6 338) L (23 778) L (6 603) L (6 544) L N/A
Phakamani 42 743 P 92 854 P 44 102 P NA 33 215 P
Kaphunga (85 218) L 250 925 P (122 209) L 92 922 P (219 135) L
Nkhungwini (28 520) L 16 351 P NA NA N/A
Simoyini NA NA 4 387 P 18 547 P 16 194 P
Key: L =Loss; P= Profit; NA=Not Audited

Source: Swaziland Government (2011;2012;2013;2014;2015)

Table 5 presents the financial status of multi-purpose cooperatives in the past 5 years (2011 to 2015).
Audit: The findings indicated that Gege MPC had two 2 audited financial statements and it was not audited for
three (3) years. Mthonjeni MPC had four (4) audited financial statements and it was not audited for one (1) year.
Zombodze MPC had four (4) audited financial statements and it was not audited for one (1) year. Phakamani MPC
had four (4) audited financial statements and it was not audited for one (1) year. Kaphunga MPC had five (5) audited
financial statements. Nkhungwini MPC had two (2) audited financial statements and it was not audited for three (3)
years. Simoyini MPC had three (3) audited financial statements and it was not audited for two (2) years. The results
indicate that the MPCs were not regularly audited.
Profit: The findings indicated that some multi-purpose cooperatives made profit while others did not. Gege MPC
did not make profit in the past five (5) years. Mthonjeni MPC made profit in 2013 only. Zombodze MPC did not
make profit in the past five (5) years. Phakamani MPC made profit for four (4) years. Kaphunga MPC made profit for
two (2) years. Nkhungwini made profit for one (1) year and Simoyini made profit for three (3) years. The findings
indicated that Phakamani and Simoyini MPCs were performing well.
Loss: The findings indicated that multi-purpose cooperatives incurred losses mostly. Gege MPC incurred losses
for two (2) years; Mthonjeni MPC incurred losses for three (3) years; Zombodze MPC incurred losses for four (4);
Phakamani MPC did not realise a loss in the past five (5) years; Kaphunga MPC incurred losses for three (3) years;
Nkhungwini MPC made a loss in one (1) year; Simoyini did not incur any loss. The results show that Gege,
Mthonjeni, Zombodze, Kaphunga, and Nkhungwini MPCs incurred losses in different years.
The findings indicated that, on average, the multi-purpose cooperatives incurred losses, with exception of
Phakamani and Simoyini who consistently made profit. Contrary to the respondents perceptions on profits made by
the cooperatives, however, the findings indicated poor financial performance. The findings implied that multi-purpose
cooperatives in the study area were not properly managed. This is made evidently by financial records, which were
not up to date. These cooperatives were making losses and sometimes delayed submitting their financial statements
for audit purposes, thus resulting into accounts not being audited. This meant that multi-purpose cooperatives in the
Shiselweni region had a poor financial performance and committee members who were responsible at that particular
period failed to account for the losses. The results are supported by Gray and Kraenzle (2002) who indicated that
reports regarding the financial difficulties experienced by agricultural cooperatives in Africa have been common.
Several financial ratios for cooperatives (revenue growth, return on assets and operating margins) were calculated
which indicated weak performance in the cooperative sector. This creates doubt about the viability of the cooperative
form of business.

4.4. Factors Affecting Performance of Multi-Purpose Cooperatives


Table 6 presents the results of the factors affecting the performance of multiple-purpose cooperatives. The Probit
results on factors affecting performance show that gender and accountability significantly affect performance. There
is a negative relationship between gender and performance at 10% significant level. Male members were less likely to

68
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

perceive that cooperatives make profit than women. The exponential beta (Exp ) shows the relative odds (odds ratio)
and indicates that male members were 0.37 times less likely to perceive cooperatives making profits than female
members. Respondents also viewed that high level of accountability is associated with high performance. The odds
ratio revealed that accountability was 1.14 times likely to increase the level of performance.

Table-6. Probit Result of factors affecting performance of multi-purpose cooperatives


Variable Coefficients Std Error b/St. Error P[1z1>z EXP()
(Constant) -1.9630 1.3280 -1.478 0.1393 0.14
Gender -0.9736* 0.5822 -1.672 0.0944 0.37
Age 0.0100 0.0169 0.593 0.5531 1.01
Education Level -0.4018 0.2581 -1.557 0.1196 0.67
Governance -0.0286 0.0715 -0.400 0.6888 0.97
Accountability 0.1325** 0.0621 2.133 0.0330 1.14
Transparency 0.0565 0.0882 0.641 0.5216 1.06
Participation -0.0852 0.1001 -0.851 0.3945 0.92
***, **, and * denote significance at 1%, 5% and 10% respectively.

4.5. Constraints Faced by Multi-Purpose Cooperatives


Members and committee members were asked to list the constraints faced by multi-purpose cooperatives. The
results presented in Table 7 suggest that multi-purpose cooperatives were faced with 7 major constraints. A majority
(80%) of committee members indicated that cooperatives were constrained by poor capital base in cooperatives,
while 75 per cent indicated that members were too old to attend to cooperatives activities. Forty four per cent
indicated that there were break-ins by thieves. Furthermore, the findings revealed that 35 per cent of the participants
indicated that there was mismanagement of funds by employees, 22 per cent, reported that there was poor record-
keeping, 12 per cent reported that there was no commitment by most committee members and employees, and 17 per
cent indicated that there were long overdue debts by members.
The results corroborate with findings by Ugochukwu and Ugwuoke (2013) that cooperative members were
constrained with poor management by officials, inadequate training and inadequate capital.

Table-7. Constraints faced by multi-purpose cooperatives (n=115)


Constraints Frequency of responses Per cent
1.Members are too old to attend to cooperatives activities 86 75
2. There is mismanagement of funds by employees 40 35
3.There are break-ins by thieves 51 44
4.There is poor capital base in cooperatives 92 80
5.There is poor record keeping 25 22
6.Long overdue debts by members 19 17
7.No commitment by most committee members and employees 14 12
Source: Field survey, 2015

5. CONCLUSIONS AND RECOMMENDATIONS


5.1. Conclusions
The results suggest that most cooperatives made losses. Most of them did not present their financial statements
for auditing and this was an indication of poor management. The study concluded that the level of accountability in
multi-purpose cooperatives was high. Committees had knowledge on cooperative management and employees had
been properly trained for their jobs. Resilient and hardworking committees could make cooperatives profitable. The
MPCs were however, weak in communication linkages between committee members and the ordinary membership.
Accountability weaknesses in cooperatives, such as failure to account for the work done in the cooperatives resulted

69
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

in poor participation by the general membership. Failure to understand the financial reports as a result of low levels of
education amongst the membership could result in poor performance of multi-purpose cooperatives.
The performance of multi-purpose cooperatives was affected by gender and accountability negatively and
positively respectively. The study further concludes that like other cooperatives, the performance of multi-purpose
cooperatives was constrained. Most of the multi-purpose cooperatives had a poor capital base and most members
were old and failed to perform their duties. There was also mismanagement of funds, and break-ins by thieves.

5.2. Recommendations
It is recommended that members who have served for a long period of time in the cooperative should encourage
and train the youth to join multi-purpose cooperatives to allow for continuity and sustainability; cooperatives should
also invest in educating their members and workers on specific areas identified by the cooperatives; there should be
close supervision of cooperative employees by committee members and cooperative officers to improve
performances, especially in ensuring financial statements are audited.

Funding: This study received no specific financial support.


Competing Interests: The authors declare that they have no competing interests.
Contributors/Acknowledgement: All authors contributed equally to the conception and design of the study.

REFERENCES
Adepoju, A.A., O.A. Oni, B.T. Omonona and A.S. Oyekale, 2011. Social capital and rural farming households welfare in South-
West Nigeria. World Rural Observations, 3(3): 150-161.
Antoine, S., L. Pierre and B. Mario, 2011. Cooperative performance measurement proposal. France: Bordeaux Management
School, BEM.
Armstrong, M., 2005. Cooperative movement in Kenya: The eagle that wont fly. Theory of regulation. 1st Edn., London:
University College of London.
Australian Agricultural Council, 1998. Agricultural cooperatives. Australia: Australian Centre for Cooperative Research and
Development, Charles Sturt University.
Babbie, E., 2013. The practice of social research. San Francisco, California: Wadsworth Publishing Co.
Best, J.W. and J.V. Kahn, 2007. Research in education. New Delhi: Prentice Hall of India Private.
Chalam, G.V. and A. Prasad, 2007. An evaluation of financial performance of cooperative societies in Andhra Pradesh: A study of
selected PACS in West Godavari District. Indian Cooperative Review, 45(1): 42-58. View at Google Scholar
Chambo, S., 2009. Agricultural cooperatives: Role in food security and rural development. Moshi, Tanzania: Moshi University
College of Cooperative and Business Studies.
Clark, E., 1991. Farmer cooperatives and economic welfare. Journal of Farm Economics, 34: 35-51.
Creswell, J.W., 2013. Qualitative inquiry and research design: Choosing among five traditions. London: Sage Publications.
Dakurah, A., B.S. Goddard and O.R. Osuteye, 2005. Promoting rural cooperatives in developing countries: The case of Sub-
Saharan Africa. Washington, D.C: The World Bank, 121.
Develtere, P., I. Pollet and F. Wanyama, 2008. Cooperating out of poverty: The renaissance of the African cooperative movement.
Geneva: ILO.
Gray, T.W. and C.A. Kraenzle, 2002. U.S. Department of Agriculture, Rural Development, Rural Business-Cooperative Service
Research Report, 192.
Harrington, D.R., 1991. Corporate financial analysis: Decisions in a global environment. 4th Edn., Homewood, IL: Irwin.
Hlatshwako, C., 2010. Economic empowerment of Swazi society through cooperative development. Coop Africa, Working Paper
No. 13. Mbabane: International Labour Organisation.

70
2016 Pak Publishing Group. All Rights Reserved.
International Journal of Sustainable Agricultural Research, 2016, 3(4): 58-71

International Cooperative Alliance, 2006. International cooperative alliance, 2006. International cooperative Alliance. Department
for International Development (DFID). Retrieved from http://www.ica.coop/ [Accessed 08 March, 2015].
Kulandaiswamy, V. and P. Murugesan, 2004. Performance of PACS: An empirical evaluation. Indian Cooperative Review, 42(2):
122-130. View at Google Scholar
Masuku, M.B., 2005. Cooperative studies, AEM 204 teaching manual. Faculty of Agriculture, University of Swaziland, Luyengo
Campus.
Mdluli, T.V., 2003. An evaluation of the education and training of cooperative societies through the cooperative members
participation programme (CMPP) in Swaziland: A case of the Lubombo region. Unpublished B. Ed. Research Report.
Kwaluseni: University of Swaziland.
Murugesan, P., 2007. Performance indicators of PACS. Indian Cooperative Review, 45(2): 110-116. View at Google Scholar
Ortmann, G.F. and P. King, 2007. Agricultural Cooperatives: History, theory and problems. Agrekon, 46(1): 18-46. View at Google

Scholar | View at Publisher

Papadopoulos, M., 2003. The concept and classifications of agricultural cooperatives. Working paper. Australian centre for
cooperative research development. Charles Sturt University.
Rankin, M. and B.K. Russell, 2005. A governance perspective on the role of cooperatives in rural development. The cooperative
sector. Columbia: University of Missouri.
Read, W.F. and M.S. Miller, 1990. The state of quality in logistics. International Journal of Physical Distribution and Logistics
Management, 21(6): 32-47. View at Google Scholar | View at Publisher
Samson, M., 2010. Designing and implementing social transfer programmes. 2nd Edn., Cape Town: EPRI Press.
Sanner, M. and J. Wilson, 2003. Stewardship, good governance and ethics. Policy brief 19. Ottawa, Canada: Institute of
Governance.
Simamora, M., 2004. Business plan development an exercise in functional food products. Retrieved from
http://ssrn.com/abstract=2729232 or http://dx.doi.org/10.2139/ssrn.2729232 [Accessed 24/10/2015].
Swaziland Government, 2011. Cooperative societies act of 2003 and cooperative societies regulations of 2005. Mbabane:
Ministry of Agriculture.
Swaziland Government, 2012. Cooperative societies act of 2003 and cooperative societies regulations of 2005. Mbabane:
Ministry of Agriculture.
Swaziland Government, 2013. Department of cooperatives reports. Mbabane: Ministry of Commerce, Industry and Trade.
Swaziland Government, 2014. Department of cooperatives reports. Mbabane: Ministry of Commerce, Industry and Trade.
Swaziland Government, 2015. Department of cooperatives reports. Mbabane: Ministry of Commerce, Industry and Trade.
Swaziland Government and UNDP, 2012. Rural cooperatives and sustenance development. Mbabane: Ministry of Agriculture.
Totlund, J., 2004. Current issues in cooperative finance and governance: Background and discussion paper. Washington D.C,
USA: Rural Development Cooperatives Programme.
Ugochukwu, E.C. and A.I. Ugwuoke, 2013. Performance evaluation of women farmer cooperative societies in Owerri agricultural
zone of Imo State, Nigeria. Journal of Agricultural Sciences, 3(2): 126-142.
Zamora, J.T. and C.A. Agutaya, 2011. The performance of multi-purpose cooperatives in the first district of the Province of
Oriental Mindoro, Philippines. Paper Presented at the International Conference on Management: Proceedings.

Views and opinions expressed in this article are the views and opinions of the author(s), International Journal of Sustainable Agricultural
Research shall not be responsible or answerable for any loss, damage or liability etc. caused in relation to/arising out of the use of the content.

71
2016 Pak Publishing Group. All Rights Reserved.